- Robinhood has agreed to acquired the cryptocurrency exchange Bitstamp; the deal is expected to cost the trading app approximately US$200 million and be completed in Q1 of 2025
- Robinhood says the acquisition will accelerate the global expansion of its crypto business, crypto has become an increasingly important source of income for the platform over the past few years
The popular trading app, Robinhood, has entered into an agreement to acquired Bitstamp, the world longest running cryptocurrency exchange. Robinhood will pay in the order of US$200 million to acquire the crypto exchange and the deal is expected to be completed sometime in Q1 of 2025.
According to a statement from Robinhood, the acquisition will accelerate the global expansion of the cryptocurrency side of its business and will greatly enhance its cryptocurrency offerings.
Related: SEC Prepares to Sue Robinhood Over Trading of Certain Crypto Assets
Why Has Robinhood Decided To Acquire Bitstamp?
As Robinhood’s Crypto General Manager, Johann Kerbrat said in a statement, “The acquisition of Bitstamp is a major step in growing our crypto business,” — but why would Robinhood, a trading app known mainly for stocks, decide to acquire an entire cryptocurrency exchange?
Well, if we take a look at Robinhood’s recent performance we can see how valuable crypto has become to the platform. After seeing huge growth during the early pandemic years and playing an important role in the growth of meme stocks like GameStop, Robinhood’s popularity — and its valuation — plummeted, dropping from over US$40 billion following its 2021 IPO to under US$10 billion in 2022.
But Robinhood’s fortunes have turned around recently, with its valuation doubling in the past year to over US$20 billion. And what has driven this turn around? Partly it has come from a massive growth in income from crypto transactions which totalled US$126 million in Q1 of 2024 (an increase of 232%), representing over a third of its total transaction-based revenue.
Related: Crypto Banter Predicts Memecoins Will Explode Thanks to GameStop and Roaring Kitty
Acquiring Bitstamp allows Robinhood to quickly grow its crypto business — the exchange comes with a large global customer base, it offers over 85 different cryptocurrencies and it has licenses and registrations in over 50 countries. By acquiring Bitstamp, Robinhood gets a larger slice of the growing cryptocurrency pie without having to spend as much time growing that side of its business (which is currently relatively small and limited to the larger cryptocurrencies).
According to Kerbrat, the acquisition also allows Robinhood to quickly expand its global footprint targeting both retail and institutional investors:
The Bitstamp team has established one of the strongest reputations across retail and institutional crypto investors. Through this strategic combination, we are better positioned to expand our footprint outside of the U.S. and welcome institutional customers to Robinhood.
Johann Kerbrat, Robinhood Crypto General Manager This continues an international push Robinhood started last year when it launched its stock trading platform in the UK and its crypto trading platform in the EU.
Source:
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